The Difference and Why It Matters
Do you think you know how to strategize? Think twice.
But do not worry, you are not alone. Many business leaders do not know what having a strategy means. They think it is merely listing goals.
They are not even slightly right.
Read our summary of “Good Strategy/ Bad Strategy” and find out what strategy is, and how you can make it the best it can be.
Who Should Read “Good Strategy / Bad Strategy”? and Why?
Richard Rumelt is one of the 25 most influential people in management today according to the Economist. He is also “strategy’s strategist” according to the prestigious McKinsey Quarterly.
Based on his lifetime of experience, he dives into the history and the classics to represent the significance of strategy in his book has a pretty self-explanatory title: “Good Strategy/ Bad Strategy”. He furthermore presents approaches that can be used to differentiate good strategy from bad strategy and reveals to you the ways to becoming successful by implementing the good one.
We recommend this informative, fascinating, enjoyable book for executives and managers who need to work on their strategizing.
About Richard Rumelt
Richard Rumelt teaches at UCLA’s Anderson School of Management. He is also a consultant on strategic management problems.
“Good Strategy / Bad Strategy Summary”
A graphics company contacted the author and strategic management consultant Richard Rumelt for his help in deﬁning its strategy.
During their ﬁrst meeting, the CEO of the company said he had a “20/20 plan” in mind, that he planned to use as the company’s fundamental strategy. In other words, he planned for his firm’s revenues to increase 20% each year, and for its proﬁt margin reach to achieve 20% or higher.
The plan he had come up with included projections of expenses, profits, and revenues. It also included strategy statements that went like: “We will be the graphics arts services ﬁrm of choice,” and “We will delight our customers with unique and creative solutions to their problems.”
After hearing him out and reading his plan, Rumelt asked the CEO what the actual steps the company was planning to make to achieve these objectives were.
Can you guess what the CEO replied?
He said that setting goals that are as ambitious as his, would automatically inspire his staff to achieve them.
Rumelt listened to what the CEO had to say on the power of motivation, but once he was done talking, he explained that he had big plans, but no strategy.
He advised him that instead of focusing on broad and general goals, the CEO and his team of employees should concentrate on discovering opportunities and finding out the best way to use them.
Why did we tell you this story?
For you to understand that success does not depend merely on grand visions and motivation, but also on skills and strategic insights.
However, what is a strategy? Even more importantly, what is a GOOD strategy?
A good strategy is straightforward, simple and easy to understand. It constitutes of “strength applied to the most promising opportunity.”
To strategize means to identify essential issues that trouble your industry, and to consequently make a plan and take result-oriented action towards fixing those critical points.
The strategy does not have much to do with leadership, innovation, vision, objectives or determination. That is the biggest misconception out there: for many people, the strategy is just an exercise that gives birth to impressive goals, nice-sounding slogans, that are in fact meaningless and unachievable.
A good business strategy presents a specific set of steps which the company needs to take to overcome a defined issue. It constitutes of numerous analyses and thoughtful, implementable policies, which are designed to overcome obstacles and push the company ahead, in the desired direction.
A good strategy is an entirely intentional and focused problem-solving activity, which focuses on fundamental and vital issues. It utilizes the intelligent application of advantage to reach better placement in the market.
Key Lessons from “Good Strategy / Bad Strategy”:
1. Bad Strategy Characteristics
2. The Core of Good Strategy
3. Design Your Strategy
Bad Strategy Characteristics
Empty slogans which are just a combination of trendy buzzwords, which take the place of significant information.
- “Failure to face the challenge.”
You cannot develop a good strategy if you do not identify your company’s core problem.
- “Mistaking goals for strategy.”
Make a difference between goals and strategy. Objectives are only items on your wish list until you take concrete steps to achieve them.
- “Bad strategic objectives.”
Goals should be overreaching, but always realistic and achievable.
The Core of Good Strategy
Identify facts and patterns which might lead your thoughts into new and different directions.
- “A Guiding Policy”
At the point when you are finished diagnosing your company’s strategic intent, you need to create a methodology which will serve as a guide and direction for your team’s actions.
- “A Set of Coherent Actions”
The difference between good and bad strategy is that good strategy acts to achieve its objectives. A plan of coherent actions will drive you where you need to go and helps in the process of wisely allocating resources.
Design Your Strategy
The strategy is planning, which you do before you start with action.
Figure out what others (consider your competitors, for example) will so in the future, as a significant part of your strategic planning process.
- “Design of coordinated action.”
Keep in mind that strategy is more than just a simple choice among different options. A strategy is something you create.
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“Good Strategy / Bad Strategy” QuotesA good strategy recognizes the nature of the challenge and offers a way of surmounting it. Simply being ambitious is not a strategy. Click To Tweet A good strategy is built on functional knowledge about what works, what doesn’t and why. Click To Tweet To see an effective design-type strategy, you must usually look away from the long successful incumbent toward the company that effectively invades its market space. Click To Tweet It is hard to show your skill as a sailor when there is no wind. Similarly, it is in moments of industry transition that skills at strategy are most valuable. Click To Tweet Good strategy grows out of an independent and careful assessment of the situation, harnessing individual insight to carefully crafted purpose. The bad strategy follows the crowd, substituting popular slogan for insights. Click To Tweet
Our Critical Review
“Good Strategy/Bad Strategy” presents the important concept of strategy in an understandable manner. Some readers who have more insight into the subject may find it too long, but on the other hand, long explanations are just what beginners need.